Posted on 12/01/2016 1:04:51 PM PST by SeekAndFind
There's no doubt Team Trump is delighted by Carrier's decision to keep in Indiana roughly half of the 2,100 jobs that the maker of heating and air conditioning equipment had planned to shift to Mexico. As Steven Mnuchin, Trump's pick for treasury secretary, told CNBC yesterday, "This is a great first win without us even having to take the job."
Actually, it's their second win. Trump also lobbied/nudged/cajoled Ford into changing its mind about shifting a sport utility vehicle production line to Mexico from Kentucky, not that doing so actually would have cost American jobs. But Carrier, especially, had become a potent symbol of Trump's economic nationalism after video of Carrier's initial offshoring decision went viral. And in response to Carrier's reversal, Trump took a victory lap on Twitter: "Big day on Thursday for Indiana and the great workers of that wonderful state. We will keep our companies and jobs in the U.S. Thanks Carrier."
But how many Trump "wins" can the American economy afford? By themselves, the moves by Ford and Carrier are inconsequential — maybe even to Carrier's workers over the longer term. It's hardly an uncommon practice at the state level to offer incentives to lure corporate relocations or to keep firms from leaving. But the practice has mixed results. For instance, Dell closed a North Carolina plant in 2009 just five years after receiving millions in state tax incentives to open it. Production then moved to Mexico.
But more broadly, this is all terrible for a nation's economic vitality if businesses make decisions to please politicians rather than customers and shareholders. Yet America's private sector has just been sent a strong signal that playing ball with Trump might be part of what it now means to run an American company. Imagine business after business, year after year, making decisions based partly on pleasing the Trump White House. In addition, Trump's hectoring on trade and offshoring distracts from the economic reality that automation poses the critical challenge for the American workforce going forward.
To be fair, exactly why Carrier reversed course is still something of a mystery. Carrier says state "incentives" were an "important consideration," along with Trump's commitment to creating a more pro-business climate in the country. Those would be the carrots. Then there are potential sticks, which may have been far more critical than tax incentives or other potential subsidies. Carrier's parent company, United Technologies, is a large federal government contractor and perhaps views the potential costs of keeping those factory jobs — a small fraction of the company's 200,000 employee workforce — in America as the price of doing business with Trump's "America First" administration. Indeed, one Indiana official, Politico reports, thinks the deal was driven by concerns United Technologies "could lose a portion of its roughly $6.7 billion in federal contracts."
Of course it wasn't so long ago that Republicans were attacking the Obama White House for its "crony capitalism," including the auto bailouts and clean energy investments in firms like Solyndra. Republicans, on the other hand, were supposedly stalwarts for competitive capitalism and vehemently against government "picking winners and losers." Some even said they were "pro-market" rather than "pro-business."
Now, not so much. Which makes you wonder if either party is willing to strongly fight for free enterprise and market-driven economic policy anymore. In her 1998 book, The Future and Its Enemies, Virginia Postrel saw the major dividing line in American politics as less left vs. right than the "dynamists" vs. the "stasists." The former values change and experimentation, as messy as those things can be. Dynamists live in anticipation of the future because they just know it will be a great place. The stasists often are nostalgia-ridden and willing to use top-down control to keep things as they are or try to shape them into familiar forms. Today they fight globalization, tomorrow it might be robots and artificial intelligence in order to "save jobs."
This time, at least, score one for the stasists and the cronyists.
What are you drinking tonight?
I’ll have some of what you are having.
Qhy not propose even smaller tax rates for any company who produces in the US
Any rejoinders less feeble than this?
That’s basically a tariff in negative terms.
That’s basically a tariff in negative terms.
[Not as if that had to be a bad thing]
You’re totally off base here. There is no perfect libertarian free market for Trump to muck up. If there were I might agree with you. The government has already placed it’s thumb on the scale through cronyism and excessive regulation. There’s NO chance that a competing business can fill the void left by offshoring... It only serves to perpetuate the greed fest.
Technology is the most dangerous enemy of USA manufacturing employment and wages - not foreign competition.
Since the bottom of The Great Recession in 2009, the total value of all goods manufactured in the USA has gone up 16%.
Since 2009, USA manufacturing employment has gone up just 7%.
He also thinks there was some sort of “new” threat about the Federal contracts being lost. I guess he is unfamiliar with the “Buy American Act of 1933” that established Federal purchasing should always give preference to American made products. All Trump needs to do is dust it off and stop all the “waivers” that purchasing agents are allowed to do that have made it useless. Extend it to anyone receiving Federal funds and all those industries we have lost will have to come back to America — TV’s, computers, electronics, office equipment, construction equipment, steel, concrete — because the built-in customer base would be huge.
If you like your air conditioning; you can keep your air conditioning.
It is a mere cost of doing business and is PASSED on to the ultimate consumer as a higher cost of the final production.
That's fine, but don't kid yourself. In the absence of Indiana cutting spending the taxpayers just gave Carrier $7M.
The state just gave Carrier $7M without decreasing spending or employing any more people. Who do you think is going to pay that $7M?
I understand the argument that the alternative is worse, but people who think tax breaks to businesses don't cost the citizenry anything are wrong.
I love Larry Kudlow, but when jimmy comes on, I leave.
It irks me when people point to automation as being the cause for the loss of jobs that are moving overseas. They are two separate issues. Obviously, if the jobs were eliminated by automation they would not be moving to Mexico or China, they would just be gone, period.
These people are thinking too small. They have no goals as to market share outside the US. What we should be focusing on is increasing productivity through automation, but instead of eliminating jobs, increase volume.
America can be the world’s factory again by hugely increasing production, reducing the cost per unit by reducing the labor per unit, and supplying the world. All while retaining the same number of workers at higher wages. There are still billions of people in the world that have no air conditioning, no vehicles, no TVs, no computers, etc. What we need to do is to reduce costs to where those people can be customers of American goods. That will REQUIRE automation to reduce the amount of high paid labor per unit and have the same number of workers producing five times as much product.
It's amazing how many miss this fact.
Whoa gramps, where’s that from ? I like it
Likewise...
Would Carrier lower their prices if they could buy steel at half the rate they pay now? Maybe. Or maybe they would just book it as higher profits.
So then an across the board state tax cut, instead of a targeted one, you would be for?
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